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Dive Brief:

Franchisors can minimize their liability in joint-employer claims by not micromanaging the compliance training they give franchisees, SHRM reports. Franchisors have more control over franchisees’ compliance training than the amount discussed during Andrew Puzder’s nomination for labor secretary by Pres. Donald Trump, according to legal experts. Puzder has since withdrawn his name from the nomination.

Bob Horton, an attorney with Bass Berry & Sims PLC in Nashville, told SHRM that franchisors should avoid answering franchisees’ specific questions about anti-discrimination or other employment law issues during compliance training because a conversation could be considered a controlling situation on the franchisor’s part, which could generate a joint-employer claim.

Dive Insight:

Ever since the ruling in the Browning-Ferris case that claimed Browning-Ferris was a joint employer with a staffing company, employers have had to deal with a new understanding of the franchisor-franchisee relationship. That case is ongoing, and oral arguments will be heard March 9 in the U.S. Court of Appeals for the District of Columbia Circuit.

Jack in the Box, the fast-food chain, won its joint-employer case by passing the “economic reality” test, which determines whether: 1) the employer has hire and fire power over workers; 2) supervises and controls workers’ schedules; 3) determines pay rates and methods; 3) determines pay rates and methods; and 4) keeps employment records.

Employers should keep the “economy reality” test in mind whenever they’re involved in a relationship with another business, whether it’s a franchisor and franchisee, host company and a staffing agency, or contractor and a subcontractor.